Correlation Between SentinelOne and CEMEX SAB

Can any of the company-specific risk be diversified away by investing in both SentinelOne and CEMEX SAB at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SentinelOne and CEMEX SAB into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SentinelOne and CEMEX SAB de, you can compare the effects of market volatilities on SentinelOne and CEMEX SAB and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in SentinelOne with a short position of CEMEX SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of SentinelOne and CEMEX SAB.

Diversification Opportunities for SentinelOne and CEMEX SAB

-0.45

Correlation Coefficient

SentinelOne  CEMEX SAB

Very good diversification

The 3 months correlation between SentinelOne and CEMEX is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and CEMEX SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEMEX SAB de and SentinelOne is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on SentinelOne are associated (or correlated) with CEMEX SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEMEX SAB de has no effect on the direction of SentinelOne i.e., SentinelOne and CEMEX SAB go up and down completely randomly.

Pair Corralation between SentinelOne and CEMEX SAB

Taking into account the 90-day investment horizon SentinelOne is expected to generate 0.56 times more return on investment than CEMEX SAB. However, SentinelOne is 1.77 times less risky than CEMEX SAB. It trades about -0.05 of its potential returns per unit of risk. CEMEX SAB de is currently generating about -0.08 per unit of risk. If you would invest  2,186  in SentinelOne on February 4, 2024 and sell it today you would lose (61.00) from holding SentinelOne or give up 2.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

SentinelOne  vs.  CEMEX SAB de

SentinelOne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SentinelOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CEMEX SAB de

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CEMEX SAB de are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, CEMEX SAB may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with SentinelOne and CEMEX SAB

The main advantage of trading using opposite SentinelOne and CEMEX SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SentinelOne position performs unexpectedly, CEMEX SAB can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CEMEX SAB will offset losses from the drop in CEMEX SAB's long position.

The idea behind SentinelOne and CEMEX SAB de pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.